Full cash rent or leave standing crops?

[Hoytvectrix]

We have a young local farmer who will likely be putting in crops on our ag ground. I'm going to be meeting with him soon to discuss crapping arrangements. Historically we have just had the farmer pay us market rental rates. I've seen some on here mention that they have an agreement with the farmer for leaving standing crops in exchange for farming the ground. For those that are using this type of an arrangement, have you found any disadvantages from it? Is that true for both corn and soybeans?

One thing that I have thought about is that it could potentially mean reduced income to offset with farm expenses as a tax write-off.

 

[356]

One thing to consider is the type of harvester used. The farmer who is putting in our soy/corn rotation's has older equipment that leaves lots of corn/beans on the ground. The deer continue to browse the fields throughout winter. The newer equipment will put more money in your pocket, but leaves the ground looking like it has been vacuumed.

 

[bigboreblr]

No mater how well harvested, there's always soybean litter. The cutting head usually misses the lowest bean on the stalk. Corn gets picked pretty clean. Unless you got a muddy spot the harvester will get stuck in.

With soybeans you could broadcast rye in them yourself, usually early sept. Corn can be done too.

My brother in law hires pilots to broadcast rye in his corn plots. He only does this close to his farm.

 

[Hoytvectrix]

One thing to consider is the type of harvester used. The farmer who is putting in our soy/corn rotation's has older equipment that leaves lots of corn/beans on the ground. The deer continue to browse the fields throughout winter. The newer equipment will put more money in your pocket, but leaves the ground looking like it has been vacuumed.

This is a really good point. We are actually going to have two different farmers farming two different properties of ours.
If I remember correctly, You are in Northwest Missouri? What are you seeing for rental rates in your area? Our county averages $130/acre in Northeast Missouri. One of our farms is getting 150 and the other is getting 130/acre.

 

[Tree Spud]

We have a young local farmer who will likely be putting in crops on our ag ground. I'm going to be meeting with him soon to discuss crapping arrangements. Historically we have just had the farmer pay us market rental rates. I've seen some on here mention that they have an agreement with the farmer for leaving standing crops in exchange for farming the ground. For those that are using this type of an arrangement, have you found any disadvantages from it? Is that true for both corn and soybeans?

One thing that I have thought about is that it could potentially mean reduced income to offset with farm expenses as a tax write-off.

How much per acre, how many acres?

In order to write off expenses, you have to set-up a business. You keep books, then have your accountant validate what can be an expenses and then complete & file your returns. I looked into this and you need a fair amount of acreage to make it work and then be able to demonstrate viable business finances.

 

[bwoods11]

My farmer in Iowa leaves me an acre or 1/2 acre of corn and beans every year. I change the location every year so that I get good corn and beans and not (cut back on fertilizer or chemical) corn or beans.

I do the same in Minnesota. It’s just part of my contract, I reduce the overall rent to offset for the plots .

Tax wise? No difference as far as I know .

 

[Hoytvectrix]

My farmer in Iowa leaves me an acre or 1/2 acre of corn and beans every year. I change the location every year so that I get good corn and beans and not (cut back on fertilizer or chemical) corn or beans.

I do the same in Minnesota. It’s just part of my contract, I reduce the overall rent to offset for the plots .

Tax wise? No difference as far as I know .View attachment 48963

For that half or one acre that is left standing, how much are you "paying" for that? If you are just subtracting that acre or half an acre from the total, the farmer still has some cost of seed in there, correct?

 

[bwoods11]

Yes I subtract approximate cost of expenses and no charge for that acre. I’m fair with it.

 

[Howboutthemdawgs]

For that half or one acre that is left standing, how much are you "paying" for that? If you are just subtracting that acre or half an acre from the total, the farmer still has some cost of seed in there, correct?

I’m interested in this as well. I would be surprised if he just backed out the rent per acre on the left standing part. Surely his inputs are more than that per acre?

 

[Bill]

Crop land rent on one part of my farm is thirds. I get paid 1/3 of the price they get when they take the crop to the elevator. Input cost and fertilizer is on them.

I play every year by ear. Sometimes I tell them to harvest and I take the $. When it’s a bad food plot year I have told them to leave my 1/3 standing in the field.

 

[Tree Spud]

Crop land rent on one part of my farm is thirds. I get paid 1/3 of the price they get when they take the crop to the elevator. Input cost and fertilizer is on them.

I play every year by ear. Sometimes I tell them to harvest and I take the $. When it’s a bad food plot year I have told them to leave my 1/3 standing in the field.

How many acres of tillable do you have?

 

[Tree Spud]

My farmer in Iowa leaves me an acre or 1/2 acre of corn and beans every year. I change the location every year so that I get good corn and beans and not (cut back on fertilizer or chemical) corn or beans.

I do the same in Minnesota. It’s just part of my contract, I reduce the overall rent to offset for the plots .

Tax wise? No difference as far as I know .View attachment 48963

Looks nice B, how many acres of tillable do you have?

 

[Bill]

How many acres of tillable do you have?

The question is how many acres are tilled, I have tillable acres growing up in early successional habitat. (Sacrilegious in some circles ). I let two pieces get farmed, a 52 acre field and a 17’ish acre field. The 17 is on 1/3’s. The 52 is bartered for more hunting ground.

 

[bwoods11]

Looks nice B, how many acres of tillable do you have?

110 in Iowa

I happened to be down there when they were combining this fall and snapped a photo .

 

[Wind Gypsy]

Crop land rent on one part of my farm is thirds. I get paid 1/3 of the price they get when they take the crop to the elevator. Input cost and fertilizer is on them.

I play every year by ear. Sometimes I tell them to harvest and I take the $. When it’s a bad food plot year I have told them to leave my 1/3 standing in the field.

That’s a nice deal. Doesn’t align with the story of farmers running on razor thin margins if they can give you 1/3 of their revenue for land rent.

 

[Bill]

That’s a nice deal. Doesn’t align with the story of farmers running on razor thin margins if they can give you 1/3 of their revenue for land rent.

I wasn’t the shrewd guy that put that together. Farmer is in his 70’s, it was his offer. But we have had drought years when no one made $ and he didn’t loose any. So on those years he was the smarter guy.

 

[omicron1792]

110 in Iowa

I happened to be down there when they were combining this fall and snapped a photo .View attachment 48964

That’s beautiful!

 

[356]

This is a really good point. We are actually going to have two different farmers farming two different properties of ours.
If I remember correctly, You are in Northwest Missouri? What are you seeing for rental rates in your area? Our county averages $130/acre in Northeast Missouri. One of our farms is getting 150 and the other is getting 130/acre.

We are on a percentage, which translated into $135/acre for soy. I was offered $150, but that farmer left the owners land in rough shape, left gates open and would be in the field during wet conditions, thus leaving deep ruts.

 

[buckdeer1]

Shares is probably more common than per acre rental.Cash rent can be better for landowner because he always gets the payment even if crop doesn't make.On 1/3s owner gets 1/3 of crop.This year we didn't harvest any of my 100 acres of beans,good thing I had insurance on the crop.At least I got 70% of 5 year average. Most properties you don't have to create a business to deduct costs you just have to make a profit sometimes.

 

[Maddog66]

My farmer in Northern Wi offered to grow corn for me in ‘23 for $300 per acre.

He normally pays me $600 per year for rent on my 25 acres that are tillable.

I’m doing it. 2 acres left standing.